Quote:
Originally Posted by TheMVP
"Money is money because the government has guns and they say it's money"
I think you've missed the point. Here's the paragraph (emphasis added):
Quote:
In normal life, people don’t worry about where the value of green pieces of paper bearing portraits of dead presidents comes from: we accept dollar notes because other people will accept dollar notes. Yet the value of a dollar doesn’t come entirely from self-fulfilling expectations: ultimately, it’s backstopped by the fact that the U.S. government will accept dollars as payment of tax liabilities — liabilities it’s able to enforce because it’s a government. If you like, fiat currencies have underlying value because men with guns say they do. And this means that their value isn’t a bubble that can collapse if people lose faith.
In other words: money is money (qua medium of exchange) because some large group of people agree that it is.
The rest is a matter of recognizing that this state of agreement is volatile, and governments enforcing tax laws requiring payment in fiat currency provides some stability to that consensus. But the primary "value" of a dollar as a currency, in the quote above, comes from the fact that people will accept it. That is why he uses the word "entirely" in the way that he does. To put it mildly, this is not a controversial claim.
The point, then, is that bitcoin qua currency doesn't have the benefit of this stability that government-backed fiat currencies have, or the stability provided by its usefulness as something other than currency, as in the comparison to gold. Although here is where my counterargument about smart contracts (or other kinds of crypto-based apps) is relevant.
Quote:
Originally Posted by TheMVP
Bitcoin naysayers never seem to acknowledge the existence of off-shore banking, currently estimated at over $20 trillion.
This seems like a non-sequitur. Do you think Krugman denies that there exists more than one fiat currency? The quote even uses the term "currencies" in the plural. There's nothing in the article that suggests a denial of the existence of off-shore banking, and I have no idea why you think this contradicts anything he said.